ADES » Topics » WE HAVE COMMITTED SIGNIFICANT RESOURCES TO THE DEVELOPMENT OF THE AC FACILITY TO SUPPLY THE EMERGING MEC MARKET AND THE INABILITY TO COMPLETE THE PROJECT IN A TIMELY MANNER WOULD LIKELY HAVE AN ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.

These excerpts taken from the ADES 10-K filed Mar 27, 2009.

WE HAVE COMMITTED SIGNIFICANT RESOURCES TO THE DEVELOPMENT OF THE AC FACILITY TO SUPPLY THE EMERGING MEC MARKET AND THE INABILITY TO COMPLETE THE PROJECT IN A TIMELY MANNER WOULD LIKELY HAVE AN ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.

ADA has committed significant resources to the development of the AC Facility, to date having contributed approximately $25.6 million to Carbon Solutions for preliminary development work, including plant design, environmental and other permitting, equipment design and procurement, land acquisition and consulting fees, and construction costs. Carbon Solutions has additional future commitments of approximately $268.7 million for which ADA has provided guaranties to date. We estimate that the “all-in” cost of the project will be approximately $363 million for a facility with one production line capable of producing approximately 150 million pounds of AC per year. If we consummate the sale of our Preferred Stock to ECP under the SPA, we will invest the net proceeds in Carbon Solutions for the AC Facility. We do not have any further capital commitments to Carbon Solutions, and we expect that all future funding for the AC Supply Business will come from ECP and third-party debt financing. Given the recent turmoil in the financial markets, Carbon Solutions has been unable to secure debt financing on reasonable terms. If ECP delays or stops providing additional equity funding for the AC Facility or if Red River is unable to obtain the debt financing for the project in a timely manner and on acceptable terms, the planned schedule for the project would be delayed and would adversely impact the project.

WE HAVE COMMITTED SIGNIFICANT RESOURCES TO THE DEVELOPMENT OF THE AC FACILITY TO SUPPLY THE EMERGING MEC MARKET AND THE INABILITY TO
COMPLETE THE PROJECT IN A TIMELY MANNER WOULD LIKELY HAVE AN ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.

ADA has committed significant
resources to the development of the AC Facility, to date having contributed approximately $25.6 million to Carbon Solutions for preliminary development work, including plant design, environmental and other permitting, equipment design and
procurement, land acquisition and consulting fees, and construction costs. Carbon Solutions has additional future commitments of approximately $268.7 million for which ADA has provided guaranties to date. We estimate that the “all-in” cost
of the project will be approximately $363 million for a facility with one production line capable of producing approximately 150 million pounds of AC per year. If we consummate the sale of our Preferred Stock to ECP under the SPA, we will
invest the net proceeds in Carbon Solutions for the AC Facility. We do not have any further capital commitments to Carbon Solutions, and we expect that all future funding for the AC Supply Business will come from ECP and third-party debt financing.
Given the recent turmoil in the financial markets, Carbon Solutions has been unable to secure debt financing on reasonable terms. If ECP delays or stops providing additional equity funding for the AC Facility or if Red River is unable to obtain the
debt financing for the project in a timely manner and on acceptable terms, the planned schedule for the project would be delayed and would adversely impact the project.

FACE="Times New Roman" SIZE="2">WE HAVE COMMITTED SIGNIFICANT RESOURCES TO THE DEVELOPMENT OF THE AC FACILITY AND THE INABILITY TO COMPLETE THE PROJECT WOULD LIKELY RESULT IN OUR BEING UNABLE TO RECOUP OUR INVESTMENT.

STYLE="margin-top:12px;margin-bottom:0px">In addition, if (i) we are unable to close the sale of our Preferred Stock to ECP under the SPA by the deadline specified in the SPA (as it may be automatically
extended) (the “SPA Outside Date”) or if the SPA were terminated, in each case other than due to a material uncured breach of the SPA by ECP, or (ii) we materially breach the SPA prior to closing and fail to cure such breach within
the time period specified in the SPA (an “ADA-ES Triggering Event”), ECP could elect to buy out ADA’s equity interest in Carbon Solutions at a purchase price equal to its capital contributions and the amount of any guaranties, letters
of credit or other credit support obligations it has provided that are not terminated or replaced or dissolve or sell Carbon Solutions. If Carbon Solutions were sold or dissolved, we would likely not be able to recoup our investment. If any of these
events were to occur, our business and financial condition would likely suffer materially as a result.

EXCERPTS ON THIS PAGE:

10-K (2 sections)
Mar 27, 2009
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